Last week, Amazon.com Inc. (NASDAQ: AMZN) announced it will be shutting down its digital storefront in China, all because of one other digital retail juggernaut that's been overlooked by most investors.
According to a public statement, Amazon will "no longer be providing seller services on Amazon.cn effective July 18" and will instead focus on attempting to provide Chinese consumers with cross-border services.
But Money Morning Executive Editor Bill Patalon isn't surprised. One of his favorite technology stocks has been edging Amazon out of the Chinese digital retail space for a few years now. Amazon's retreat is the just the latest sign this company is rewriting the rules.
This is a firm on the verge of eclipsing Amazon's international e-commerce presence. Its price has gained 170% since 2016, and analysts expect that number to grow to 320% by the end of this year.
But they're not taking a victory lap just yet. In fact, they're just getting started...
This Giant Can Leave Amazon in the Dust
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Alibaba Group Holding Ltd. (NYSE: BABA) is China's largest digital retailer - and Amazon's biggest nightmare.
That's because Alibaba has a lock on China's explosive consumer growth.
Right now, there are over 500 million consumers in China's middle class.
That's nearly twice the size of the entire population of the United States. That number is expected to rise to more than 600 million in the next two years.
China's immense consumer population fuels an explosive retail sector, generating around $6 trillion in annual profits.
Over the last 18 years, China's retail profits have jumped 900%, and nearly half of that growth has occurred in the last four years. Today, it still expands.
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China's exponential growth in retail sales is largely the result of a meteoric rise in online shopping among China's consumers.
In 2017, online shoppers in China bought over $1 trillion in goods and services for the first time ever. Online shoppers in the United States, by contrast, spent just $455 billion.
Plus, China's online customer base continues to grow. Retail analysts project that China's consumers will account for 60% of global online commerce in just two years.
And it's likely that most of this online retail traffic will be captured by Alibaba Inc. rather than competitors like Amazon.
Last year, 58% of all Chinese online shopping went through Alibaba.
As Chinese consumers increasingly turn to the web for shopping, Alibaba's share of the nation's e-commerce is likely to grow.
That's certainly the case with Alibaba's Singles' Day.
Every year, Alibaba hosts a Singles' Day sale, a 24-hour fire sale commemorating China's Singles' Day holiday.
In 2018, Alibaba raked in $30.3 billion in sales in just 24 hours - a 27% rise over last year's total of $25.3 billion.
That kind of intake is impressive on its own. But it's jaw-dropping when you compare it to Amazon's take-in from Prime Day.
Last July, Amazon held a 24-hour sale called Prime Day - the American digital retailer's biggest sales day of the year.
It's estimated to have made $4 billion in sales. That's 86% less than Alibaba's one-day sale.
No wonder Bill isn't surprised.
After all, he's been following Alibaba since the beginning.
Bill first told investors that Alibaba stock was a strong buy in January 2016, when the company was trading for only $69 a share.
Today, with Alibaba trading for around $187, Bill continues to call the company a strong buy.
Wall Street analysts agree too. They've put a price target of $282 on the stock, a rise of over 50% from today's price over the next 12 months.
That would be a 320% gain for investors who listened to Bill's initial recommendation in 2016.
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